Nearly one-third of organisations either already use or plan to use cloud or software-as-a-service (SaaS) offerings to boost their core business intelligence (BI) functions, Gartner, Inc reports.

Only 17pc of organisations have replaced or plan to replace parts of their core BI functions with cloud/SaaS offerings, suggests a survey of 1,364 IT managers and business users of BI platforms in Q4 of 2011.

However, almost 27pc already use or plan to use cloud/SaaS options to augment their BI capabilities for specific lines of business or subject areas in the next 12 months.

“Business users are often frustrated by the deployment cycles, costs, complicated upgrade processes and IT infrastructures demanded by on-premises BI solutions,” said James Richardson, research director at Gartner.

“SaaS- and cloud-based BI is perceived as offering a quicker, potentially lower-cost and easier-to-deploy alternative, though this has yet to be proven. It’s evident that, despite growing interest, the market is confused about what cloud/SaaS BI and analytics are and what they can deliver.”

Gartner has identified three drivers for the adoption of cloud/SaaS offerings for BI, analytics and performance management:

Time to value: The use of SaaS BI may lead to faster deployment, insight and value, particularly where existing work and/or a limited budget constrains IT so it can’t respond to information and analysis demands as quickly as the business needs.

Cost concerns: The cost dynamic differs between on-premises and SaaS models. Software purchased as a service can usually be expensed, rather than capitalised, on the balance sheet. Buyers often think SaaS is less expensive, but this is unproven, Gartner said. Gartner’s cost models show SaaS can be less expensive over the first five years, but not thereafter. The long-term benefits lie elsewhere in terms of cash flow and reduced IT support costs, for example.

Lack of available expertise: SaaS analytic applications offer prebuilt intellectual property that can help firms work around a lack of the skills needed to build their own analytic solutions.

Instead of disrupting the enterprise BI platform and corporate performance management suite market, a more likely scenario is that SaaS and cloud-based offerings will tap into new opportunities – for instance, with mid-market companies that have yet to invest in BI, or by offering domain-specific analytics, Gartner said.

“If their operational business applications are in the cloud, organisations should consider pursuing cloud BI/analytics for those domains,” said Richardson.

“However, they must assess risks on an ongoing basis and ensure their chosen cloud provider has appropriate business skills to provide a viable outcome. They must also ensure their BI strategy outlines how to ensure that data flows to and from these solutions in order not to become yet more silos of analysis.”